Ollie’s ramps up store growth to capitalize on recent store closings; Q4 sales rise
Ollie's Bargain Outlet Holdings is broadening its footprint by buying bankrupt leases.
The closeout retailer reported its results on heels of its recent acquisition of an additional 40 former Big Lots locations, for an accelerated growth target of 75 new stores for fiscal 2025. The company said the acquired stores — whose purchase was funded by cash on hand — are leased properties with below-market rent and favorable leasing structures, located in good trade areas and have been serving value-oriented customers for many years.
“With so many retailers closing stores or going bankrupt in the past year, there are a considerable number of abandoned customers, merchandise, real estate, and talent in the marketplace,” said new president and CEO Eric van der Valk, who took the reins of Ollie’s in February. “We think there is a unique opportunity to take on some of these assets in a manner that strengthens our competitive positioning, broadens our footprint, and bolsters shareholder returns for years to come.”
On the company's earnings call, the CEO spoke to the strength of Ollie's "very stable" business model.
"The closeout market is massive and there will always be merchandise available for a variety of reasons innovation, packaging changes, shifts in consumer demand, store closures, tariffs, uncertainty and other unforeseen events," he told analysts. "While sources of products are constantly changing, the availability of closeouts is stable and consistent. With our flexible buying model, we are in control of what we buy and when we buy it."
Ollie’s net income totaled $68.6 million, or $1.11 a share, for the quarter ended, down from $76.5 million, or $1.23 a share, in the year-ago quarter. Adjusted earnings were $1.19, in line with Street estimates.
Sales increased 2.8% to $667.1 million, below estimates. Comparable store sales increased 2.8%, more than expected.
“We were very pleased with our financial results and the underlying trends in our business,” said Van der Valk. “At a time when consumers need it most, we are delivering unprecedented value through an ever-changing assortment that combines quality, national brands, and pricing in a way that can only be found at Ollie’s.”
Stock Buyback
Ollie’s announced a new share repurchase authorization for the repurchase of an additional $300 million of the company’s outstanding common stock. It is effective through March 31, 2029.
“Our cash generation is strong, and we continue to grow our cash balances each year," said Van der Valk. “With $429 million of cash and short-term investments and no borrowings under our revolving credit facility at the end of fiscal 2024, we have the ability to fund accelerated growth, return capital to shareholders, and pursue unique opportunities as they arise.”
Ollie's forecast fiscal 2025 sales between $2.56 billion and $2.59 billion. The company guided full-year adjusted net income between $3.65 and $3.75 a share.
The company ended the quarter with 559 stores in 31 states, an increase of 9.2% year-over-year.
